Recruitment and human resource management in China tend to be daunting tasks for the
unprepared. Surging demand for talent fiercely outstrips its supply. This is further intensified by the great diversities in cultures, education levels and practices that exist within China. In fact, human resources have been repeatedly cited by U.S. and European companies in China as the top challenge they face, even more so than the infamous problems of regulatory interpretation and bureaucracy in China.

This HR do's and don'ts Guidebook provides foreign Small-to-Medium Enterprises (SMEs) with essential information on the labor market in China. This includes an overview of the Chinese culture, recruitment tips and tricks, and laws regarding HR management in China. The JLJ Group hopes to give a head start in HR perspective to companies interested in dong business in China.

 Section 1: Cultural Differences in China
 Section 2: Recruitment in China
 Section 3: Human Resource Management in China
 Section 4: Case Studies
 Section 5: Frequently Asked Questions

 Section 1: Cultural Differences in China

Miscommunications occur frequently between Chinese and their Western counterparts due to
cultural differences. This is particularly detrimental to the hiring and retaining of Chinese talents. Hence, it is important for foreign companies to understand some of the major concepts in Chinese culture and avoid any miscommunications where possible. Each of the following concepts has a rough counterpart in Western culture, but is far more central and widely understood in that of China. A good understanding of them is extremely important when conducting business in China.

Importance of Relationships - Guanxi

The concept of guanxi is extremely important in almost all aspects of Chinese culture. In fact,
there is no precise translation of the word, meaning “relationships” or “connections.” In China, the network of people that one knows is pivotal to his or her business relations. These people include suppliers, retailers, banks, government officials, and other acquaintances and contacts. Guanxi can be leveraged to facilitate the completion of certain difficult tasks, and often involves reciprocation of favors and social exchanges. In guanxi, one can view many interactions in terms of gifts, which must be repaid in some way or another if the relationship is to continue. Anything from a large favor, to an introduction, to a physical gift must be repaid in some way. Therefore, when receiving favors in China, one must closely examine the inherent meaning behind them – perhaps a desired favor in turn, payback for a past favor, or an apology. If you are not able to help someone in the way they might like, to maintain guanxi you must give some other gift instead. Guanxi may thus be difficult to establish, as the Chinese are wary of entering into relationships which may prove unworthy. This is why networking is so crucial; establishing a relationship often involves a mutual third party. In particular, the appropriate Guanxi makes talents more accessible for hiring and makes employees less likely to change jobs. Hence, failure to understand and maintain good Guanxi with the key stakeholders of one’s business in China can be fatal.

Value of Face - Mianzi

Mianzi is another concept that foreigners frequently overlook. It literally means “face” and involves showing respect for someone else in terms of one’s social status, prestige and reputation. Having good “face” and not “losing face” is extremely important in Chinese culture. Often, mainzi plays a large role in social interactions, so it is important to be able to recognize one’s perceived standing – and that of others – at any given moment. “Face” involves a Chinese person’s personal pride and dignity, and thus can be a very sensitive subject, one in which many foreigners often unintentionally offend their Chinese acquaintances. Causing someone to lose face can result from a direct insult or embarrassment or from disregarding social norms. Knowing the appropriate ranking, hierarchy, and etiquette is thus especially important in recognizing others’ mianzi and properly “giving face” to others. In turn, helping to save face is generally appreciated in China, such as helping someone to maneuver out of a difficult situation (but in a subtle manner, of course). Hence, it is useful to study the meaning of mianzi in understanding the psyche of Chinese employees and business associates, as well as what they value in employment and career development.

Tendency of Indirect Expression

There is a tendency for Chinese to convey their ideas indirectly using subtle and less forceful
ways of expression, especially towards strangers and foreigners. This is related to the Chinese’s emphasis on humility as a form of respect for others, so much so that exaggeration is sometimes even viewed as an act of arrogance. Proper mianzi, for example, often involves very subtle social cues, especially in showing respect for others and humility in one’s own actions. When receiving compliments, it is most appropriate to be more self-deprecating rather than accepting them, as humility is highly valued. In turn, instead of being blunt when asked for an opinion, Chinese will often give more vague answers in accordance with not causing loss of face. Indirect expression in China also involves nonverbal cues, which one should take careful note of. As such, foreigners may find themselves confused or disappointed at the mild responses they receive. More importantly, this may affect the proper comparison of Chinese candidates against their more outspoken western counterparts during the selection process. One should always keep in mind the concept of indirect and subtle communication, and how it applies to the situation of mianzi, when in China.

Back to Top

 Section 2: Recruitment in China

China’s rapid economic growth has resulted in an increasingly individualistic society, which is
particularly true of the younger generation. Many Chinese now place their personal interests as priority, negating typical stereotypes of the conservative Chinese. This is vastly different from the collectivist society that China has been traditionally believed to be. Consequently, many foreign companies faced difficulties recruiting in China.

Current Trends in the Chinese Labor Market

High Turnover Rates

Observation:	It is increasingly common for Chinese employees to switch jobs every few years.
Fact:	The younger Chinese are very competitive and are always looking for career progression opportunities to better position themselves in the global market. Hence, they tend to welcome headhunters and do not hesitate to take up better offers.
Outcome:	Talent is easily accessible if one has the relevant contacts. However, it remains generally hard for employers to retain these talents in a single company for longterm commitment.

Increasingly Competitive Salaries

Observation:	Salaries are generally becoming more competitive in China. In particular, salaries in 1st-tier cities are approaching levels found in other more developed countries.
Fact:	The phenomenal economic growth of China has led to a rapid rise in salaries for managerial and higher positions. This is in contrast to the very stable and generally stagnant salaries found in developed countries.
Outcome:	Cheap labor is disappearing in China for managerial positions and higher positions, especially in 1st-tier cities.

Prevalence of Younger Upper Management

Observation:	Managerial and higher positions are increasingly held by young individuals. In fact, many directors of corporations in China are only in their early thirties.
Fact:	Due to the Chinese economic reform in 1978, education standards have improved drastically over the past years. This has resulted in a great disparity in knowledge and capabilities between the young and old, especially in terms of English competency levels. This has thrown off the conventional thinking that senior candidates are always more capable than their younger  counterparts.
Outcome:	Highly educated young Chinese are now possible candidates for managerial and higher positions in China and such positions are no longer necessarily held by senior employees.

Rules of Thumb for Hiring Managers in SMEs:

1. Look for passively available candidates for important positions
   Passively available candidates tend to be highly capable individuals who are not threatened by the possibility of retrenchment. This is different from active job seekers who may have been retrenched due to performance-related issues. This is particularly important for positions that are responsible for a company’s profits and losses. Hence, companies are advised to be careful of being tempted by the extremely convenient and active online recruitment services in China. Instead, professional recruiters should be engaged to source for and recruit quality candidates from other companies.
   
   
2. Expect to pay a premium for proficient users of English
   Due to the great disparity in English competency levels existing in China, candidates strong in English can easily command premium salaries that are 30% higher than the average employee. This is partly due to the high demand for such candidates from multi-national corporations (MNCs).
   
   
3. Do not depend solely on phone interviews when hiring in China
   Phone interviews provide insufficient information for screening candidates. There have been cases of deceit in phone interviews where candidates engaged external help to ace through interviews without actually possessing the required competencies. Moreover, due to China’s great diversity of ethnic groups, it becomes even harder to assess the qualities and reliability of a person through a simple phone call. Hence, companies should always conduct face-toface interviews for better evaluation of candidates and prevent the occurrence of frauds.
   
   
4. Do not negotiate directly with candidates if you are unfamiliar with their cultures
   This is particularly true for sensitive issues such as salary negotiations.  Miscommunications tend to occur in such negotiations due to cultural differences in expression. This has repeatedly resulted in foreign companies dismissing good candidates prematurely. Hence, companies should always negotiate salaries and other sensitive issues via experienced recruiters or HR professionals who are familiar with the local culture.
   
   
5. Keep in touch with selected candidates
   Chinese candidates have very strong desires to succeed in the global economy. Hence, it is not uncommon to find them continuing to search for better opportunities despite having accepted an offer. Thus, it would be wise for hiring managers to keep in touch with the selected candidates and take note if they are still keen and available to join the company. This will help to avoid unnecessary surprises when the candidate fails to show up on the first day of work.
   
   
6. Hire candidates from the vicinity if your office is located in 2nd/3rd tier cities
   Foreign SMEs have been found to prefer candidates from 1st tier cities despite having their offices located in 2nd or 3rd tier cities. This is because these candidates are more likely to be able to relate easily to their employers in terms of both language as well as their expectations for standards of living. However, such candidates may find it difficult to adapt to the poorer living conditions of the lower tiered cities. This can eventually lead to high employee turnover rates and become detrimental to the company.
   
   
7. Place greater emphasis on core competencies in 2nd/3rd tier cities
   As English proficiency levels tend to be lower in 2nd and 3rd tier cities, it may be difficult to locate candidates who are both good in English and have the required competencies. One way to work around this is to hire candidates with English majors and train them in the relevant skill sets. Alternatively, companies can hire candidates based on the required competencies and leave the linguistic requirements to a specialized role within the company.

Engaging a Professional Recruiter

Employers are advised to engage professional recruiters when sourcing for specific talents to fill important positions. In particular, they can help ensure the timely arrival of suitable candidates who are committed to and interested in pursuing the opportunity. This avoids the dire consequences of leaving such important positions vacant for extended periods of time.

Methodology

The key differentiating factor between a professional recruiter and an amateur lies in the
methodology adopted in their search for candidates. Professional recruiters are in control of
the entire process. They understand the specific needs of their clients and are able to accurately identify a best-fit candidate in the shortest possible time. In contrast, amateurs are heavily reliant on the quality of resumes they receive and may not be able to perform when faced with unfamiliar industries.

In particular, many professional recruiters use a precise search process called the Social Networking System (SNS). It helps recruiters to narrow down and identify potential candidates efficiently via recommendations from one’s contacts in the relevant industry. The process is then repeated for several degrees of separation until a best-fit individual emerges from the recommendations. Nonetheless, this is a complicated process and requires many years of experience in headhunting as well as in-depth knowledge of niche areas in specific industries to be effective.

Other Factors

Besides methodology, intangible soft-skills are also critical in headhunting. These are important factors that must be considered when evaluating the professionalism of a recruiter.

• Network
  This determines the range of coverage in an executive search service. However, it does not necessary mean that a wider search is always better, as in-depth knowledge of a specific labor market may have been compromised for greater coverage. Hence, the suitability of a recruiter’s network depends on the job requirements and where such candidates can be found.
  
  
• Persuasion Skills
  Best-fit candidates may be passively-available instead of being actively engaged in job-hunting. In other words, they are still employed and may require substantial persuasion to leave their established portfolio. Hence, a recruiter’s ability to motivate a candidate to explore new opportunities is a crucial, final step in headhunting. Moreover, the way an offer is positioned in terms of career development will also affect a candidate’s commitment to the client company after the end of the probation period

Hence, it is important to engage a capable recruiter, especially for positions that are hard to fill. Otherwise, mismatches may occur repeatedly, wasting both time and effort of all parties involved.

 Section 3: Human Resource Management in China

As most hiring managers would know, the hiring process does not end with recruitment. This is especially more so in China, where stiff competition for talents exists and employees generally do not hesitate to leave their positions for better opportunities. Hence, a sound retention
plan is required to prevent key personnel from leaving the company to join one’s competitors.
Nonetheless, it is also important for companies to be familiar with the legal requirements of HR in China to protect everyone’s rights and avoid unnecessary disputes.

Legal Requirements in China

The new labor contract law that was put in place in 2008 created a more certain legal environment for the labor market in China. Since then, many companies have been caught off-guard by the loss of flexibility and stronger enforcement of the new regulations. Hence, the following guidelines have been prepared to prevent newcomers from committing the same errors and to serve as a brief guide to the basics of HR in China.

The Employment Contract

An employment contract is the basic means to protecting the rights of both the employer and
the employee in China. It is a legal document agreed and signed by both parties, specifying the rules and regulations of the company to be adhered to. Hence, it is strongly recommended for
all employers to have employment contracts with their employees in China to avoid unnecessary labor disputes or accidental infringement of the law.

The following are the key components of an employment contract:

1. The name, domicile of the legal representative or main person in charge of the Employer
2. The name, domicile and number of the resident ID card or other valid identity document of the Employee
3. The term of the employment contract and probation period
4. The job title, job description and the place of work
5. Working hours, rest and leave
6. Labor compensation
7. Social insurance
8. Labor protection, working conditions and protection against occupational hazards
9. Termination conditions
10. Breach of contract provisions and disciplinary rules
11. Training bond, non-disclosure agreement and non-competition agreement, if necessary
12. Other matters which laws and statutes require to be included in employment contracts

Employers should note that, according to the law, an employee has the right to demand for twice the agreed salary if no labor contract is signed by both parties within 30 days.

Employee Personnel File

Every employee in China owns a personnel file and a proof of employment history. The employee personnel file details the employee’s personal information, such as the family address, phone number, urgent contact person, education, and employment history.

Employers in Shanghai are to withhold the handbooks during the period of employment. As for representative offices, which are not allowed to hire local employees directly, employers are to engage local labor agencies to maintain these files.

Compensation

Compensation is typically divided into four elements: base pay, incentives/bonuses, allowances and benefits.

• Base Pay is paid monthly and varies from 12 - 14 months. A 13-month payment scheme is common in China, with the additional month’s pay issued during the Spring Festival month
(usually February).

• Incentive Pay can be paid monthly, quarterly or annually. This is usually paid in the 13th month and is usually tied to individual performance. Some incentives include individual performance plans, cash profit sharing plans, comprehensive performance plans, sales bonus plans, sales commissions as well as special recognition awards.

• Allowance is a unique and very important form of compensation in China. Although companies are not obliged to provide for it, allowance is sometimes even more highly valued than its cash equivalent in the Chinese culture.

• Benefits can be classified as mandatory or supplementary. Mandatory benefits (such as social benefits) are stipulated by the China Labor Law and usually comprise a significant portion of the total compensation. In fact, the cost of social benefits alone is substantial as it includes pension, medical, maternity, work Injury, unemployment and housing funds. On the other hand, supplemental benefits are voluntary. However, these are increasingly provided by employers, especially more so for employees over a certain salary level.

Severance payments are usually required unless the employee is dismissed with a specifically defined cause or if the contract is terminated by employee himself or herself without complications. However, Severance payments will not be required if the employee does not agree to renew the contract despite being offered the renewal with the same or better conditions than those stipulated in the current contract.

A specifically defined cause includes the following acts by the employee:

The employee:
• Proven not to be able to satisfy the conditions for employment during the probation period.
• Materially breached the employer’s specified rules and regulations
• Caused substantial damage to the employer through serious negligence of duty or graft
• Is unable to complete conflicting tasks given by two different employers

If severance payments are required, they are generally equivalent to a month’s worth of salary per year of employment in the company. For employment periods of less than six months, half of a month’s salary shall then be paid as severance payment.

Nonetheless, companies should note that this is only applicable if the employee has been given at least 30 days of prior written notice, or one month’s wage in lieu of notice.

Things to note for HR Managers

1. Do set up company policies to regulate employees’ daily working behavior.
   An employee can only be dismissed without paying severance payment if he or she has been found to have seriously breached a company policy that has been acknowledged and signed by the employee. Hence, it is very important for employers to specify clauses to define acts that are harmful to the company in any way.
   
   
2. Do sign a binding contract with an employee if paid training is provided.
   An employee can be required to serve a certain period of time with the company if he or she has been provided with training paid by the company. The company is then entitled to demand payment for the training costs if the employee leaves the company prior to the contract expiration date.
   
   
3. Do set probation periods according to the regulations.
   The labor contract law requires probation periods to be not more than a month if the contract term is three months or more but less than a year, and not more than two months if the contract term is less than three years. If an employment contract has a term of at least three years or is open-ended, the probation period should not exceed six months.
   
   
4. Don’t deduct salaries of employees for any reason other than those allowed by
   the labor law.
   Employers are not allowed to deduct an employee’s salary even if company policy has been breached. This is unless an agreement has been reached in writing by both parties.
   
   
5. Don’t detain employees’ ID card or charge any deposit.
   It is illegal for companies to detain employee ID cards or require deposits to regulate their behavior. Instead, detailed company policies should be drafted as explained earlier.
   
   
6. Don’t change job positions of employees without their consent.
   The employee is protected by the law from unilateral amendments to his or her job position by the company. Any amendments should be agreed upon and signed in an agreement by both parties.
   
   
7. Don’t terminate employment with the employees during their medical or
   maternity leave.
   Companies are not allowed to terminate employment contracts with their employees during their medical or maternal leave other than those allowed by the labor law. However, they are allowed to make changes in the labor contract if the changes have been agreed by both parties in writing.

Consequences of breaching Labor Contract Law

Companies are reminded not to breach the labor contract law or take advantage of their employees for short-term gains. While the employee may not retaliate during the period of employment for fear of losing their jobs, employers are actually liable for damages anytime until a year after the employee has left the company.

Foreign companies should also note that the labor rights of employees are well-publicized and understood in China. Hence, HR departments are advised to be well-versed with the new labor contract law and not breach any clauses intentionally or accidentally.

The labor contract law of China does not apply to foreign workers working in a foreign company in China. However, foreigners working in domestic companies are subjected to the labor  contract law of China.

Key Components of a Sound Retention Plan

A sound talent retention plan is the key to sustaining one’s success in China. Without talent
retention, continued implementation of strategies will difficult and additional expenditures such as recruitment and training costs will be incurred.

1. Remuneration
   Salaries often reflect one’s social status in China. Hence, better opportunities are often synonymous with higher salaries. This is a root cause behind the worker retention problem in China. In fact, many talented managers have been poached by competitors on the basis of higher salaries. Thus, it is extremely important to keep salaries competitive with market levels, especially for senior positions.
   
   
2. Training and career development
   While competitive salaries offer a short-term solution to retaining talent, training and career development allow companies to align their long-term strategies to employees’ career goals. As foreign languages and specific skill sets are very relevant to one’s career progression, professional training in these areas tends to be highly sought after. Others include clearly specified promotion criteria as well as regular departmental rotation programs. However, employers should note that mentorship programs are now considered to be less desirable, as mentors often withhold important skills and knowledge from their apprentices in order to secure their own positions in the company.
   
   
3. Organizational culture
   In general, Chinese employees prefer flexible organizations that place greater emphasis on interpersonal relationships. This allows room for creativity and creates a friendly working environment on the basis of helping each other instead of following orders. Thus, it will be beneficial for foreign companies to adapt their cultures and inculcate a greater sense of ‘family’ in their China offices. This will create a sense of belonging to the company and instill greater teamwork among the employees.
   
   
4. Quality of relationship with employees
   Just as relationships are important in managing external parties in China, relationships are also necessary in managing and retaining employees. It is a common mistake for managers to distant themselves away from their subordinates. They should instead build genuine friendships with their subordinates such that the latter will remain loyal to the company even in times of difficulties or despite receiving better offers. However, managers should also note that such relationships work in both ways - they may eventually find it difficult to terminate non-performing employees as a result of the personal relationships that may be involved.

Back to Top

 Section 4: Case Studies

The following cases studies have been taken from past projects completed by The JLJ Group. They serve to illustrate some of the problems real foreign companies have been facing in China in the areas of recruitment and HR.

Case A: Turnaround Strategy

Problem:
Despite being the major shareholder, a European Conglomerate (EC) realized that it was losing control of a joint-venture (JV) it had formed with a Chinese company (CC) more than 5 years ago. Reports from the JV did not seem to justify the investments that had been made, while audited financial statements seemed questionable. EC contemplated a turnaround strategy to regain control of the JV. However, substantial information/evidence would be required for justification purposes prior to taking any drastic measures.

Solution:
EC wanted to put in place a new General Manager (GM) for the JV. He or she should be a local
Chinese and be able to build good working relationships with the local employees. In particular, the new GM has to be trustworthy and loyal to EC.

Outcome:
A GM matching the required profile was eventually found. The new GM then entered the JV as
intended and found evidence of discrepancies. This enabled EC to make an informed decision. The JV was then finally restructured with existing key position holders replaced.

Case B: Market Entry

Problem:
Despite having a major market share in the European automation component industry, a Private SME (PS) faced difficulties entering the China market. Competition was intense as foreign competitors had been selling a similar product in China for the past 6 years. Moreover, it would be extremely difficult for a new entrant such as PS to attract experienced and talented individuals from its competitors and help it break into the new market.

Solution:
PS needed a project champion to take charge and direct the entire market entry process. He
or she would have to be a local Chinese with strong relationships with potential key clients
in China and be committed to help PS build up its market share in China from scratch.

Outcome:
A capable Sales Director (SD) was eventually hired. Within two years, SD managed to help PS
capture 10% of the total market share in China. This was an impressive feat as it was actually
equivalent to the entire market volume of PS back in Europe.

Case C: Executive Search

Problem:
An American MNC (AM) that made semiconductor components for automotive companies in China wanted to hire a Senior Quality Director (SQD) to be based in China as a liaison officer for its clients. He or she should have more than 10 years of experience in both automotive manufacturing and semiconductor assembly and test industries. However, such a combination of experiences is generally rare, and even more so in China’s relatively new markets. Consequently, AM was unable to locate a suitable candidate despite spending nearly a year searching via different recruiting channels in China.

Solution:
AM needed the help of an executive search service to search in markets beyond China. A suitable SQD was then finally found in a Semiconductor Assembly and Test Plant in Singapore. Having an excellent reputation for designing Quality Management programs that were specially catered to the needs of his automotive clients, he was the ideal candidate for AM.

Outcome:
The Singapore candidate was offered the position shortly after the interview and was relocated
to China 2 months thereafter to assume the position.

Case D: Human Resource Management

Problem:
An American company (AC) hired a Chinese lady (CL) for an important position that required
frequent travelling. Hence, the candidate should not have been pregnant. However, several months later, CL was found to be pregnant and admitted to deceit during the interview several months ago.

Solution:
On analysis, CL was found to have successfully completed her probation period. This meant that she could not be terminated on the basis of unsuitability. Moreover, pregnant ladies were protected by the law from unjustified termination and AC had no documented means of justification - its employee handbook did not specify detailed rules and regulations for employees to adhere to. Hence, it was in AC’s best interest to retain CL, as any forceful termination would entitle CL to claim an amount equivalent to the monthly salaries she would have earned until her child turned one year old.

Outcome:
AC’s employee handbook was revamped. Detailed clauses that not only adhered to the Chinese laws but also protected AC’s rights were included in the new handbook. CL was then replaced, and assumed some other role that is more suitable for pregnant ladies.

Case E: Salary Restructuring

Problem:
A Consulting Company (CC) was looking for an alternative solution to reduce overhead costs
in view of falling revenues during the economic crisis. It understood that layoffs were not viable
in the long run and might even lead to further expenses in terms of severance payments and rehiring costs in the future.

Solution:
CC was recommended to lower the basic salary and introduce a new performance-based
commission component. This would ensure that the salary expenses justified company revenues and that basic living expenses of the employees were taken care of. Moreover, should employees decide to resign as a result of the new salary structure, severance payments would not be required.

Outcome:
A staff meeting was held to explain CC’s situation and announce the new salary structure. Agreement forms were then given out and signed promptly. The new arrangement greatly motivated the employees to work harder and this eventually translated into a substantial improvement in CC’s bottom line.

Case F: Layoff Options

Problem:
An American Enterprise (AE) was contemplating retrenching its senior employees who were
receiving exceedingly high salaries for work that could easily have been done by junior employees. However, such a large-scale layoff would require AE to adhere to time-consuming procedures detailed in law, which meant that several more months of salaries would have to be paid in the process. Moreover, such an extended period of retrenchment would be extremely detrimental to the company morale. Hence, AE needed an alternative solution.

Solution:
An alternative solution was found to dismiss the employees in separate batches and avoid the
time-consuming procedures required of a ‘large-scale layoff’. While such ungrounded dismissals
would require AE to pay double the amount of severance payment, AE would still be better off as severance payments were capped at 3 times the average salary of employees in a company. This was significantly lower than the monthly salary of a senior employee.

Outcome:
The upper management subsequently met with the affected employees and signed the termination agreements. The senior employees were told of the predicament of the company and how much compensation they would receive on termination. Through this, AE was able to cut down on its labor costs substantially within a short period of time and free up company resources for additional business development activities.

Back to Top

  Section 5: Frequently Asked Questions

1. What are the things to note with regards to job application in China?

Hiring managers should note that cover letters are usually not required in China. In
addition, candidates are also generally not particular about the presentation and formatting
of their resumes. Hence, employers should take this into consideration when comparing
Chinese and Western candidates. This will help to avoid dismissing exceptionally talented
individuals for reasons as minor as a less visually appealing resume.

Hiring managers in China should also take note not to depend too heavily on the education
background of the candidates as an estimation of his or her abilities. This is because the
competency levels of young Chinese graduates may vary widely despite having similar
education backgrounds. This is very different from Western countries where the education
system is more standardized.

2. Who should I hire as my company’s representative in China to run the representative office?

Candidates in their late 20s or early 30s with a relatively good command of the English
language should suffice to run a representative office, covering administrative and functional
duties such as sales and marketing. However, if specific skills sets are required to represent
the company and uphold its image, it is then recommended that the candidate has at least
5 years of prior experience in the particular field.

3. What is the minimum wage rate in China?

This varies from city to city. It is 960 and 800 RMB/month (excluding benefits) in Shanghai
and Beijing respectively. However, foreign companies tend to pay much higher salaries
than the minimum wage rates, even for fresh graduates.

4. Are cheap and capable executives still available in China?

These employees generally fall into two categories: candidates from lower tiered cities
and experienced individuals who do not speak good English. Hence, employers would
have to decide on the location of their businesses and if they are willing to pay a premium
for candidates who are able to speak good English.

5. What salaries do fresh graduates expect in today’s China?

This varies from city to city. According to a study conducted by Fudan University’s
journalism school, fresh graduates in Shanghai continue to expect high starting salaries
of between 3,000 and 5,000 RMB/month. However, a survey conducted by Zhaopin.com,
one of China’s leading online recruitment agencies, found that actual starting salaries in
2008 were much lower, at 2,981 and 2,714 RMB in Shanghai and Beijing respectively. For
tier-2 and 3 cities, salary figures can easily be 70% or lower.

However, do note that the above figure does not apply to graduates from top Chinese
universities as well as Chinese scholars who have returned from their overseas studies.
These individuals have proven themselves to be exceptional by emerging top among
10 million other students in the annual college entrance exams. They have an excellent
command of English and are able to produce work of world-class standards. Hence, they
usually command a premium in starting salaries despite being fresh graduates.

6. Where can I look for quality employees for entry-level positions?

Career fairs and online recruitment agencies are generally quite popular in China for
meeting and filtering out the potential candidates. For instance, a job fair in central China
attracted over 10,000 migrant workers in 2009. Other sources include direct recruitment
via the company home page or campus recruitment seminars.

7. What would be more attractive to employees – high wages, prestigious job title, training or career development?

While training and career development opportunities are often cited as important factors
in making employment decisions, the final decision is usually heavily influenced by the
salaries and job titles offered. This is closely linked to the concept of Mianzi as discussed
earlier. This is because a person’s place and position of employment is closely related to
his or her social status, prestige, and reputation.

8. How many days of annual leave are employees entitled to?

Employees who have worked for at least 12 months will be entitled to paid annual leave.
Those with 1 to 10 years of experience are entitled 5 days of annual leave; those with
10 to 20 years of experience are entitled 10 days, while those with at least 20 years of
experience are entitled 15 days. For new hires who have accumulated at least 12 months
of work experience, the number of days of paid annual leave will be: calculated as such:

(Number of days remaining in the year ÷ 365 days) x
(Number of days of leave he or she is entitled to per year as explained above)

9. How many days of medical leave are employees entitled to?

Employees are entitled to 3 months of medical leave within the first year of employment,
increasing thereafter by a month for every additional year of employment, up to a total of 24 months. Employees who have exceeded their medical leave entitlement may be subjected to the termination of their labor contracts as approved by the law.

However, employees who have been determined to be completely incapacitated, but not qualified for retirement or termination, shall be given extended medical leave of at least 24 months inclusive of his or her entitlement.

Back to Top

For more information, please contact us: info@jljgroup.com